2-1 Types of Business Ownership

What is the primary legal consideration when starting a business?

• The way you legally structure your company
• Creating a marketing plan
• Choosing a location for the business
• Hiring employees

When choosing a business ownership structure, which factor is most important to consider?

• The level of liability protection
• The location of the business
• The potential for profit
• The number of employees

Which of the following best describes liability in a business context?

• The physical assets owned by a business
• The total revenue generated by a business
• The legal responsibility for business actions, debts, and obligations
• The amount of profit a business makes

What does unlimited liability mean for a business owner?

• The owner can only lose what they invested
• The owner can lose more than they invested in the business
• The owner has no financial risk
• The owner is protected from all debts

In a Sole Proprietorship, what type of liability does the owner have?

• Shared liability
• Unlimited liability
• Limited liability
• No liability

What is a common misconception about Sole Proprietorships?

• They are easy to set up
• They are the most common form of business ownership
• They provide limited liability
• The owner has complete control

Which type of partnership allows for limited liability and decision-making power for all partners?

• Limited Partnership
• General Partnership
• Sole Proprietorship
• Limited Liability Partnership (LLP)

What is a key feature of a Limited Liability Company (LLC)?

• It combines characteristics of sole proprietorships or partnerships while limiting liability
• It has unlimited liability for its owners
• It is owned by shareholders
• It is a type of corporation with double taxation

Which of the following statements about corporations is accurate?

• They are always taxed at a lower rate than individuals
• They cannot be controlled by a board of directors
• They offer limited liability to their owners
• They are not separate legal entities from their owners

What distinguishes C Corporations from other business structures?

• They have unlimited liability
• They are owned by a single individual
• They experience double taxation
• They do not pay taxes